This article has been revised to reflect the following correction: Lawmakers are recommending Noem’s $5 billion general budget for Fiscal Year 2021.
PIERRE, S.D. (KELO) — Lawmakers are pushing forward with Gov. Kristi Noem’s (R-SD) budget as she recommended for the new fiscal year, so far. That may change as the legislature looks to possibly ignore her recommendations to not fund a needs-based college scholarship.
The power of the purse traditionally is held by the legislature, and while true in South Dakota, the legislature essentially is greenlighting Noem’s second recommended budget.
Lawmakers are recommending Noem’s $5 billion general budget for Fiscal Year 2021, which begins July 1. The legislature’s Joint Committee on Appropriations put forward a budget bill this week matching the governor’s recommendations.
The budget includes growing the state workforce by more than 30 new positions.
EXPLORE: See the number of employees in agencies across the state lower in this story.
This is certainly not the end of the budget process. There are currently more than 40 bills still working their way through the legislature with special increases recommended by the governor, agencies and lawmakers. That process will move into early March.
General bill vs. separate bills
To understand why there are so many bills, you have to understand the difference between the two types of bills. The general appropriation bill is the ordinary expenses of the “executive, legislative and judicial departments of the state, the current expenses of state institutions, interest on the public debt, and for common schools,” according to South Dakota’s Constitution.
EXPLORE the general budget by funding source in an interactive graphic lower in the story.
Anything outside of that has to be made in a separate bill. They require a 2/3 majority vote by members in each house of the legislature.
Some of these other bills include Noem’s recommendation for a fund dedicated to fighting wildfires and a new health sciences building at the University of South Dakota. Each of these initiatives has to be passed by a supermajority in the legislature.
Lawmakers also have pitches of their own, like a bi-partisan bill to begin an adoption assistance grant program. House Bill 1232 would move $500,000 to this new fund. Grants would be awarded to complete the home study process of adoption.
There is one major exception to this process: lawmakers cannot allow the amount of money spent to exceed the anticipated revenue. This will be South Dakota’s 131st year of a balanced budget and it is a requirement thanks to an amendment to the state’s constitution approved in 2012.
Noem may also strike any items of any bill passed by the legislature making appropriations.
Areas of uncertainty remain as the legislative session enters its 21st day on Tuesday (lawmakers are off for President’s Day). Noem’s budget doesn’t include any of the estimated $1.9 million in one-time and $1.6 million in ongoing costs for an industrial hemp program in the state.
It will be up to lawmakers to fund that program, through another bill.
Ignoring the governor’s recommendations?
Some of the bills requested by agencies are for projects Noem didn’t recommend. One of those is with the Board of Regents request for $1.5 million in general funds to establish the Dakota Promise scholarship, a needs-based scholarship at South Dakota’s universities.
Noem didn’t recommend funding it, but the joint committee on appropriations filed a bill appropriating $2 million to establish the fund. The bill hasn’t yet been voted on.
Then there are the nearly $40 million in bills proposed by lawmakers. These have varying degrees of support and historically not all pass.
Why there’s a hoghouse in Pierre
There are also several bills introduced by lawmakers that take $1 from the general fund. These are considered “hoghouse vehicles” and are basically placeholder bills. They allow lawmakers to completely re-write the bill and adjust money spent on certain areas as the session continues.
Retaining a balanced budget
It’s the law to have a balanced budget and South Dakota has followed that for more than a century.
“Government in South Dakota lives within its means. We balance our budget without accounting gimmicks or tricks,” Noem said in her 2020 State of the State address.
States like Illinois have struggled with a balanced budget. Despite claims from state leaders, several policy analysis groups believe Illinois’ budget remains out of balance by more than $1 billion.
South Dakota remains in a challenging position to maintain balance, as revenues drop and natural disasters cripple parts of the state’s infrastructure.
In her December budget address, Noem had said there would be no raises for state workers or teachers. Her tone changed in January.
“Since my budget address, revenues have been slightly better than expected. What this means is that we may have extra flexibility to achieve the things we want to accomplish. My number one priority with additional, on-going money will be to provide increases to K-12 schools, providers, and state employees,” Noem said in January.
Clarification on state employee raises could be coming as soon as next week, when administration officials testify in the legislature about state employee compensation and health insurance. As Capitol Bureau Correspondent Bob Mercer reports, Noem said in January she was going to look at data over the next two months to decide.
“Legislators in past years typically have waited until the final days of the session to complete state government’s budget. This year the main run ends March 12,” Mercer reports.
New projections released Wednesday show revenues down in FY21 from FY20, but about $10.8 million more coming into the state than was projected in December when Noem unveiled her budget.
The power of the purse
Most states have a similar process to South Dakota by giving the power to create the budget to the governor and allowing the legislature to approve. Several states like Arizona, Colorado, New Mexico, Oklahoma and Texas do not.
Instead, they put the process of creating the budget directly in the hands of lawmakers, according to the National Conference of State Legislatures.
NCSL looked at how those states, with different session schedules, varying levels of budget staff and partisan clashes, continued to budget by the legislature.
In the federal government, a budget recommendation comes from the president. Congress is not required to adopt it. The legislative branch instead often uses the president’s budget as a guide of what the administration wants. Ideally, Congress then builds out the budget over a period of several months.
Several government shutdowns Americans have seen in the last few decades have been related to the budgeting process and the decision not to pass a new budget or a continuing resolution. A CR continues funding the government with a formula using the previous year’s budget.
The federal government’s budget is vital to states like South Dakota, which receives an estimated 34.8 percent of revenue from federal funds. According to that FY 2017 figure from Pew Research, South Dakota is in the higher tier of states that rely on federal dollars, but not as high as neighboring Wyoming and Montana.